Land, Although They're Not Making More Of It...

The problem is less a question of land, and more of valuation. There is little doubt that most land has lost value in the last few years. There is even talk about vulture apartment investors pricing at a fraction of construction cost plus zero for land. To some extent that may be reflect in "impairment of assets". But you have to have plenty of equity to do that, and developers are rarely so well capitalized. Another disincentive to impairment is if the asset in question is collateral for a loan that might be kept current. International accounting standards call for periodic revaluation of assets, but don't expect their adoption to radically change management behavior.

Now, let's say a developer sees an opportunity to build and sell houses. The price point is, say, 4x/house, down from 6x a few years ago. Construction cost, for lots of reasons is 2x, down from 3x. But land, including entitlement (planning, legal, etc.) and carrying cost (loan interest) is up to 3x from 2x. So, build, sell and make 2x in cash flow after present expenses, but a 1x loss after land at book.

Not all companies have the same problem. Lennar Corp sold a lot of land at the top of the market to a consortium including CalPers, the California public employees' pension fund. They recently bought it back for a lot less . Am told that CalPers took a total loss on their position. Leads to another topic, the unfunded liabilities of public pensions...